UK Royal Mail in Privatization Standoff

18 October 2006

LONDON: The chairman of UK postal service the Royal Mail, has found himself eyeball-to-eyeball with the Blair administration on the boulder-strewn path to privatization.

Allan Leighton is under pressure from the government to back down over his proposal to give away up to £5,000 ($9k; €7k) in shares to each of the 200,000 employees, which equates to 20% of the business.

But trade and industry Secretary Alistair Darling wants to release no more than 15% to the workforce, a standoff which has reportedly prompted a "back me or fire me" response from Leighton.

The chairman has the support of prime minister Blair, who is understood to admire the way Leighton has taken the Royal Mail from losing £2 million a week to annual profits of £600m.

But many British parliamentarians and postal unions are opposed to any change in ownership; and some ministers are nervous about the burden to the public purse if Leighton's wishes are granted.

A DTI spokesman comments: "We are continuing to consider employee incentivization as part of an ongoing publicly-owned business. But we would have to stress that we also have to have regard to value for money for the taxpayer."

The Royal Mail remains circumspect, saying only: "The talks with the DTI are continuing and no conclusions have been reached."

Data sourced from Brand Republic (UK); additional content by WARC staff